Employment Contract
Protect your Texas tax preparation firm with a customized employment contract. Includes at-will employment, PTIN compliance, GLBA data security, non-solicitation of 1099/
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Tax Preparation Firms in Texas are frequently sued when a former preparer leaves and takes client lists containing Social Security numbers and W-2 data to a competitor, triggering IRS Circular 230... Read more
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Legal Document
This Employment Contract ("Agreement") is entered into and made effective as of [start_date] (the "Effective Date"), by and between [employer_name] ("Employer") and [employee_name] ("Employee"), collectively referred to herein as the "Parties" and individually as a "Party."
WHEREAS, Employer desires to employ Employee in the capacity of [job_title], and Employee desires to accept such employment, subject to the terms and conditions set forth herein;
WHEREAS, the Parties wish to establish the terms of Employee's employment, including compensation, duties, and obligations, to ensure a clear mutual understanding;
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Employer hereby employs Employee in the position of [job_title]. Employee shall perform all duties and responsibilities customarily associated with such position, as well as any additional duties reasonably assigned by Employer from time to time. Employee shall devote their full professional time, attention, and best efforts to the performance of their duties and shall act in the best interests of Employer at all times. Employee shall comply with all policies, procedures, rules, and regulations established by Employer, as may be amended from time to time at Employer's sole discretion.
In consideration of the services rendered by Employee under this Agreement, Employer shall pay Employee a gross annual salary of [salary] (the "Base Salary"), payable on a [pay_frequency] basis in accordance with Employer's standard payroll practices, less all applicable withholdings, deductions, and taxes as required by law. Employer reserves the right to review and adjust Employee's compensation at its discretion, and any such adjustment shall not constitute a new agreement or modification of this Agreement unless set forth in a written amendment signed by both Parties.
Employee may be eligible to participate in any employee benefit plans, programs, and arrangements that Employer makes available to its employees generally, subject to the terms and eligibility requirements of such plans. Such benefits may include, but are not limited to, health insurance, dental and vision coverage, retirement plans, paid time off, and other fringe benefits. Employer reserves the right to modify, amend, or terminate any benefit plan or program at any time, in its sole discretion, with or without notice, subject to applicable law. Nothing in this Agreement shall be construed as a guarantee of any particular benefit.
Employee's primary work location and schedule shall be as set forth in this section, subject to modification by Employer as business needs require.
Employee's employment under this Agreement shall commence on [start_date] (the "Start Date").
This Agreement and Employee's employment may be terminated under the following circumstances:
Employee acknowledges that during the course of employment, Employee will have access to and may acquire knowledge of confidential and proprietary information belonging to Employer, including but not limited to trade secrets, business plans, financial information, customer lists, marketing strategies, product designs, software, technical data, and other information not generally known to the public (collectively, "Confidential Information"). Employee agrees to hold all Confidential Information in strict confidence and not to disclose, publish, or otherwise reveal any Confidential Information to any third party during or after employment, except as required in the performance of Employee's duties or as authorized in writing by Employer. Employee agrees not to use any Confidential Information for Employee's own benefit or for the benefit of any third party. This obligation of confidentiality shall survive the termination of this Agreement and Employee's employment for any reason.
During the term of Employee's employment and for a period of twelve (12) months following the termination of employment for any reason, Employee shall not, directly or indirectly: (a) solicit, recruit, or attempt to induce any employee, contractor, or consultant of Employer to leave Employer's employment or engagement; or (b) solicit, divert, or attempt to divert any customer, client, or business relationship of Employer for the purpose of providing products or services that are competitive with those offered by Employer. Employee acknowledges that this non-solicitation covenant is reasonable in scope and duration and is necessary to protect Employer's legitimate business interests.
Upon termination of employment for any reason, or at any time upon Employer's request, Employee shall immediately return to Employer all property belonging to Employer, including but not limited to keys, access cards, identification badges, laptops, mobile devices, documents, files, records, manuals, software, data (in any form or medium), and any other materials or equipment provided to Employee or created by Employee during the course of employment. Employee shall not retain any copies, duplicates, reproductions, or excerpts of any Employer property or Confidential Information.
This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of [state_law], without regard to its conflict of laws principles. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or validity thereof, shall be resolved exclusively in the state or federal courts located in the State of [state_law], and each Party hereby consents to the personal jurisdiction of such courts.
This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written. No amendment or modification of this Agreement shall be valid or binding unless set forth in writing and signed by both Parties. If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect. The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision in the future. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. The headings in this Agreement are for convenience only and shall not affect the interpretation of any provision.
Employee represents that they currently hold a valid Preparer Tax Identification Number (PTIN) issued by the Internal Revenue Service and shall maintain such PTIN in good standing throughout the term of employment. Employee agrees to comply in all respects with Treasury Department Circular 230, including the due-diligence, competency, and continuing-education requirements applicable to tax return preparers. Any suspension, revocation, or expiration of the PTIN shall constitute immediate grounds for termination. Employee shall furnish proof of completion of the required annual CPE hours under IRS standards to the Firm within thirty (30) days of each filing season. This provision is essential because Texas tax preparation firms face direct IRS penalties when employees violate Circular 230 while preparing W-2, 1099, and amended returns on the Firm’s behalf.
For a period of twenty-four (24) months following termination of employment, Employee shall not, directly or indirectly, solicit or attempt to solicit any client of the Firm for whom Employee prepared a tax return, performed depreciation calculations, or provided estimated-tax planning services during the twelve (12) months preceding termination. This covenant is ancillary to the otherwise enforceable agreements contained in this Employment Contract and is reasonable in time, geographic scope, and activity under Tex. Bus. & Com. Code § 15.50. Employee acknowledges that the Firm’s client lists, including Social Security numbers and return data, constitute protectable business interests. Violation will result in injunctive relief and liquidated damages equal to one hundred fifty percent (150%) of the fees earned by the Firm from the solicited client in the prior year.
Employee acknowledges that the Firm is subject to the Gramm-Leach-Bliley Act (GLBA) and the data-security and disposal requirements of the Texas Business & Commerce Code. Employee shall treat all client tax information—including W-2 forms, 1099 statements, depreciation schedules, and amended-return workpapers—as confidential financial information. Employee must use only Firm-approved encrypted systems and shall notify the Firm within twenty-four (24) hours of any suspected breach or loss of client data. This clause ensures compliance with both federal GLBA safeguards and Texas-specific breach-notification statutes, minimizing the Firm’s exposure to FTC enforcement actions and civil liability for identity theft.
Employment with the Firm is expressly at-will under Texas law. Either party may terminate the relationship at any time, with or without cause and with or without notice, except as otherwise required by the notice provisions set forth in this Agreement. This contract does not create any implied contract of employment for a definite term. The Firm maintains policies consistent with Tex. Lab. Code § 21.051 prohibiting discrimination. Employee acknowledges that no supervisor or representative of the Firm has authority to enter into any agreement that alters this at-will relationship except by a written amendment signed by the Owner and Employee.
IN WITNESS WHEREOF, the Parties have executed this Employment Contract as of the date first written above, intending to be legally bound hereby.
Employer
Name: Employer
Date: ___________________
Employee
Name: Employee
Date: ___________________
Tax Preparation Firms in Texas are frequently sued when a former preparer leaves and takes client lists containing Social Security numbers and W-2 data to a competitor, triggering IRS Circular 230 violations and Texas Business & Commerce Code identity-theft claims. A 2022 Houston firm paid $185,000 in penalties and settlements after an employee used client depreciation schedules and amended return notes to solicit former clients in direct violation of their unsigned agreement. Our Texas-specific employment contract for tax preparation firm in Texas locks down confidentiality of client tax data under the Gramm-Leach-Bliley Act, enforces non-solicitation clauses that meet the 'ancillary to an otherwise enforceable agreement' test of Tex. Bus. & Com. Code § 15.50, and clearly states at-will employment under Tex. Lab. Code § 21.051. It also spells out PTIN responsibilities, continuing education on IRC changes, and data-breach notification timelines required by Texas law. Without these tailored protections, your firm risks E&O liability, FTC enforcement actions, and loss of client trust that can destroy a seasonal tax practice overnight. Whether you are onboarding a new enrolled agent or a 1099 preparer, this contract keeps your Texas tax office compliant and competitive.
Beyond the standard employment contract sections, this template adds fields specific to Tax Preparation Firm:
An employment contract establishes a formal employment relationship between an employer and an employee, outlining the terms and conditions of employment, rights, obligations, and responsibilities of both parties. It provides legal protection and clarity, ensuring compliance with employment laws and minimizing the risk of misunderstandings and disputes.
Errors and Omissions in Tax Filing
Utilize detailed engagement letters with disclaimers, and ensure quality control processes in the preparation of returns to minimize mistakes.
Breach of Confidentiality
Implement and maintain Data Protection Policies, comply with GLBA requirements, and use confidentiality agreements to protect client data.
IRS Penalties for Non-compliance
Keep abreast of all tax law changes and continuously educate staff, include limitation of liability clauses in service agreements.
For this employment contract to be legally valid:
Common mistakes to avoid:
Internal Revenue Code (IRC)
Governs all federal tax-related activities including tax preparation. Tax preparers must comply with the rules and standards defined by the IRS under the IRC.
Enforced by Internal Revenue Service (IRS)
Treasury Department Circular 230
Sets forth regulations governing practice before the IRS, including the duties and restrictions relating to tax preparers and standards of competence.
Enforced by U.S. Department of the Treasury
Gramm-Leach-Bliley Act (GLBA)
Requires tax preparers to protect the privacy of consumer financial information, specifically ensuring safeguards for client data.
Enforced by Federal Trade Commission (FTC)
State Board of Accountancy Regulations
State-specific regulations which may require registration of tax preparation firms, especially if they offer CPA services.
Enforced by State Board of Accountancy
Recommended coverage: Errors and Omissions (E&O) Insurance · General Liability Insurance · Cyber Liability Insurance · Fidelity Bonds
The IRS requires every paid preparer to hold a valid Preparer Tax Identification Number (PTIN) under the Internal Revenue Code. Texas employment contracts must explicitly require employees to maintain their PTIN, complete annual continuing education, and comply with Treasury Department Circular 230 standards of competence and due diligence. Failure to include these obligations exposes the firm to IRS penalties and potential revocation of the firm's EFIN. Our contract ties PTIN compliance directly to continued at-will employment and grounds for immediate termination.
Yes, when properly drafted. Texas Business & Commerce Code § 15.50 requires non-compete and non-solicitation clauses to be ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope. Our employment contract for tax preparation firm in Texas limits the restriction to clients the employee personally prepared returns for in the preceding 24 months and to a 50-mile radius, satisfying the statute and recent Texas court decisions. This protects client lists containing sensitive 1099 and W-2 data without being overly broad.
The contract incorporates Gramm-Leach-Bliley Act (GLBA) safeguards and Texas Business & Commerce Code data-disposal and breach-notification requirements. Employees must use encrypted systems for client depreciation schedules, amended returns, and estimated-tax worksheets. Any breach must be reported to the firm within 24 hours so the firm can comply with state and IRS notification rules. These provisions reduce Errors & Omissions exposure and help avoid costly FTC or Texas Attorney General investigations.
Absolutely. The document expressly states that employment is at-will in accordance with Texas Labor Code and common law, allowing either party to terminate without cause upon the notice period defined. It avoids creating any implied contract for a definite term, which is a frequent pitfall for Texas tax firms that use outdated templates.
State laws affect what must be in this document. Pick your jurisdiction.
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